Soft commodities rally to multi-year peaks

By David Brough

LONDON (Reuters) - London coffee, cocoa and sugar futures rallied on Friday to multi-year peaks as investment funds and speculators shifted money into soft commodities in search of stellar returns.

Soft commodities have seen waves of support from funds looking for fresh investment avenues, with agricultural commodities tipped as a good bet for 2008.

Coffee, cocoa and raw sugar futures have soared by more than 20 percent since the start of this year, powered by heavy investment fund buying as stock markets have lagged.

ICE arabica futures are up 23 percent, cocoa 27 percent and raw sugar futures 24 percent so far this year. In contrast, the MSCI main world equity index fell 8.26 percent in January.

"It is the season for soft commodities," said Nestor Osorio, Executive Director of the London-based International Coffee Organization (ICO).

"I'm very surprised to see how pronounced the trend is at the moment," he told Reuters.

Robusta coffee futures jumped over 3 percent on Friday morning to a 10-and-a-half-year peak of $2,450 per tonne, and arabica coffee climbed to a 10-year high at $1.6015 per lb.

Cocoa futures shot up to a 24-year high at $2,585 a tonne, and raw sugar soared to an 18-month high at 13.73 cents a lb. White sugar futures hit a 15-month peak of $379.90 per tonne.